Another Shot Fired in the Tablet Price War

Barnes & Noble (NYSE: BKS  ) isn't going to bow out of the e-reader and tablet markets without a fight.

The struggling bookseller cut prices of its tablet-like e-readers over the weekend.

The $169 Nook Color can now be had for $149. The 8-gigabyte Nook Tablet -- the closest match to Amazon.com's (Nasdaq: AMZN  ) Kindle Fire -- is now cheaper after a $20 haircut to $179. The 16-gig model is going from $249 to $199.

There could be many reasons for the move.

• Barnes & Noble may have new hardware coming out, and this is a way to clear out inventory.
• Amazon is rumored to be nearing a release for an updated Kindle Fire, and that may accompany a price cut for the original model.
• Last month's release of Google's (Nasdaq: GOOG  ) Nexus 7 at $199 disrupted the market with superior specs to the Nook Tablet and Kindle Fire.

Barnes & Noble has always had the advantage of its physical stores and its reputation with bibliophiles, but loyalty isn't blind to the rapidly evolving marketplace. The Nexus 7 and growing chatter that Apple (Nasdaq: AAPL  ) is going to dive into the entry-level market with its own 7-inch tablet requires that both Barnes & Noble and Amazon keep their gadgets aggressively priced.

Barnes & Noble didn't have the flexibility that Amazon has had over the past year in sacrificing near-term margins for the sake of market share, but the company got a surprising boost earlier this year when Microsoft (Nasdaq: MSFT  ) made a substantial investment in the retailer's money-losing Nook business.

Saving $20 or $50 on a gadget may not seem like much, but there's a definite advantage of being the cheapest option in a marketplace of cheap people.

Your move, Amazon.

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